France, Switzerland hint at cross-border CBDC
TL;DR Breakdown
- France, Switzerland to trial cross-border CBDC
- Digital Yuan, inspiration behind project?
- Switzerland, France says project doesn’t mean a CBDC is in sight
The Bank of France and the Swiss National Bank, the apex bank of both France and Switzerland, are currently working on an experimental cross-border CBDC (Center Bank Digital Currency), dubbed “Project Jura.”
The announcement was made by the Swiss National Bank on Thursday, noting that the apex banks would work with the Bank for International Settlements (BIS) Innovation Hub and a “private sector consortium” led by Accenture to experiment with wholesale CBDCs for cross-border settlement.
Some commercial banks outside Accenture involved in the cross-border CBDC project include UBS Group AG, Credit Suisse Group AG, and Natixis SA.
The project’s trials would test the cross-border remittance functionalities and exchange of a financial instrument against a euro CBDC.
Banks in France and Switzerland will settle the transactions. The two banks stressed that these transactions are “exploratory in nature” and should not be seen as a signal that either the Banque de France or the Swiss National Bank plan to issue wholesale CBDC. However, both banks expressed enthusiasm for the experiment.
The experiment is part of a global movement by central banks exploring the use of digital currency as cryptocurrency becomes more popular and the use of cash continues to wane.
France, Switzerland cross-border CBDC, inspired by digital yuan?
The current cross-border CBDC trials by the central banks of France and Switzerland are the first major trials by any country apart from China.
The Asian country remains the only one globally to have begun trials of its Digital Yuan, which has been in the pipeline since 2014.
However, many other countries are also coming up with CBDC trials. Russia recently announced it would start its CBDC trials in 2022. South Korea and Japan are expected to begin their trials during the same time frame.
Along with several other G-20 nations, the US views China’s progress as a threat and accelerated its development process. The recent G-20 meeting also discussed CBDC plans and released a common regulatory plan for the same.
